Tag: uninsured

Another Fairly Insane Cross-National Health Care Comparison

Yesterday, countless newspapers published a really disappointing story by Noam Levey that the Los Angeles Times ran under this title:

Global push to guarantee health coverage leaves U.S. behind; China, Mexico and other countries far less affluent are working to provide medical insurance for all citizens. It’s viewed as an economic investment.

The article is little more than a puff piece for the hotly contested idea of universal coverage. It gives zero space to the competing strain of thought that the less the government does for the poor, the sick, and the vulnerable, the better off they will be.

It quotes “Dr. Julio Frenk, a former health minister in Mexico and dean of the Harvard School of Public Health” as saying, “As countries advance, they are realizing that creating universal healthcare systems is a necessity for long-term economic development.” A necessity? Gosh. It’s a wonder the United States ever became the world’s largest economy.

It speaks of such government guarantees as being popular, when what it really means to say is that people are dependent on the government for their health care and frightened to death that someone might take it away.

It laments the fact that the United States is an “outlier” because it fails to guarantee access to health care for all citizens, which “stands in stark contrast to America’s historic leadership in education…Long before most European countries, the United States ensured access to public schooling.” Yet it makes no mention of how U.S. students fare poorly in comparison to those in other advanced countries.

It devotes no time to the costs of such guarantees, other than to say that they are sometimes “more than twice what was expected.” But don’t worry, those costs are borne by the government. It does not say where governments get all that money. I guess we’ll never know.

Speaking of taxes, it makes no mention of how taxes suppress economic development. Evidently, unlike other taxes, those that support government-run health care systems do not incur the deadweight loss of taxation.

But the article was at its most ridiculous when it suggested that the health care sectors in poor countries like Rwanda and Ghana might possibly be ahead of the United States in any way whatsoever. As I have written about Rwanda:

The United States generates many of the HIV treatments currently fighting Rwanda’s AIDS epidemic, as well as other medical innovations saving lives there and around the world.  More than any other nation, we create the wealth that purchases those and other treatments for Rwandans and other impoverished peoples.  The United States is probably closer to providing universal access to medical care for its citizens — and, indeed, the whole world — than Rwanda.  Rwanda’s “universal” system leaves 8 percent of its population uninsured. Though official estimates put the U.S. uninsured rate at 15.4 percent, the actual percentage is lower; and again, uninsured Americans typically have better access to care than insured Rwandans.  The real paradox is here that Rwandan elites think the United States is doing something wrong.

Unfortunately, it’s not just the Rwandan elites. For my thoughts on how sensible people can make such insensible comparisons between the United States and other nations, read the rest of my post on Rwanda.

Nearly Two-Thirds of ObamaCare’s Supposed Beneficiaries Think It Won’t Help Them

Here are a few takeaways from the Kaiser Family Foundation’s most recent monthly poll.

1. Nearly Two Thirds of ObamaCare’s Supposed Beneficiaries Think It Won’t Help Them.

ObamaCare’s actual beneficiaries are politicians, government bureaucrats, insurance companies, drug manufacturers, etc.—but that’s another blog post for another time.

The law’s supposed beneficiaries are the uninsured. Yet 61 percent of them think the law will either not help them or will hurt them (see pie chart below). The main takeaway: Congress can repeal ObamaCare and its supposed beneficiaries won’t even care.

 

2. Some of the Uninsured Who Think ObamaCare Will Help Them Are Wrong.

One respondent said that under ObamaCare, you “can go to the doctor with no problems, unlike now you have to worry about insurance and bills.” Yeah. Good luck with that.

3. ObamaCare Is Less Popular than Ever.

In August 2011, support for ObamaCare hit an all-time low in the KFF poll:

HHS Plays Chicken Little — Again

USA Today reports on a new Obama administration study:

On average, uninsured families can pay only about 12% of their hospital bills in full. Families with incomes above 400% of the poverty level, or about $88,000 a year for a family of four, pay about 37% of their hospital bills in full, according to the Department of Health and Human Services study.

Oy, where to begin?

This is pre-existing conditions all over again.  In the hope of saving ObamaCare from the gallows, the Obama administration is blowing a real but relatively small problem way out of proportion.

The best data indicate that the problem of the uninsured not being able to pay their medical bills is real but relatively small.  “Uncompensated care” for the uninsured accounts for just 2.8 percent of health care spending. To put that in perspective, 30 percent of Medicare spending is pure waste, according to the Dartmouth Atlas. Moreover, studies show that the uninsured who do pay their bills pay so much more than private insurance does that they more than make up for the uninsured who don’t pay their bills.  That is, total uncompensated care may be negative.

This HHS report adds nothing to our understanding of this problem. Everyone already knows that nearly everybody would have a hard time paying an expensive hospital bill if they didn’t have health insurance.

In fact, this report detracts from our understanding of the problem. It essentially says that if all uninsured people were to experience a hospitalization, only some of them would be able to pay the entire bill for some hospitalizations—not necessarily their own hospitalization—with their liquid assets.  That’s as non-illuminating as saying that very few “D” students could afford to pay four years of college tuition (say, $100,000) with the money in their bank account:

  1. Just like few “D” students are headed to college, very few of the uninsured are going to be hospitalized.  Not only are most of the uninsured young and healthy, but most of them buy insurance as they get older.
  2. The “D” students who do go to college probably won’t be attending the most expensive colleges.  Likewise, the uninsured who are hospitalized are likely to have relatively less-expensive episodes of care.
  3. Of the “D” students who attend college, some would be able to pay for some of their tuition from their bank accounts.  But rather than tell us how much of these hypothetical medical bills the uninsured could pay, HHS reports the number that would be unable to pay these hypothetical medical bills “in full,” and that total billings for those hypothetical hospitalizations—not the unpaid amount—account for 95 percent of medical care provided to the uninsured.
  4. Some of those “D” students could obtain student loans and pay off their tuition over time.  Likewise, some of the uninsured will be able to borrow money or sell their houses or cars to pay their medical bills.  But HHS doesn’t account for the ability of the uninsured to borrow, nor does it count their ability to tap non-financial assets like cars and houses.

In short, HHS bent over backward to make this problem appear bigger than it is.  Moreover, they couched their misleading findings in ways that lent themselves to even greater exaggeration.  For example, the above quote from USA Today,

uninsured families can pay only about 12% of their hospital bills in full.

paints a far darker picture than what HHS actually found:

On average, uninsured families can only afford to pay in full for about 12% of the admissions to hospital (hospitalizations) they might experience.  [Emphasis added.]

It’s almost as if HHS was hoping reporters would misreport their findings in a way that made the problem sound worse.

Rwanda and the Psychic Benefits of Universal Coverage

Last week, The New York Times published an article subtitled, “In Desperately Poor Rwanda, Most Have Health Insurance.”  The main theme was the contrast between Rwanda’s compulsory health insurance system and the as-yet-non-compulsory U.S. health insurance market:

Rwanda has had national health insurance for 11 years now; 92 percent of the nation is covered, and the premiums are $2 a year.

Sunny Ntayomba, an editorial writer for The New Times, a newspaper based in the capital, Kigali, is aware of the paradox: his nation, one of the world’s poorest, insures more of its citizens than the world’s richest does.

He met an American college student passing through last year, and found it “absurd, ridiculous, that I have health insurance and she didn’t,” he said, adding: “And if she got sick, her parents might go bankrupt. The saddest thing was the way she shrugged her shoulders and just hoped not to fall sick.”

I don’t see anything absurd here, but I do see something remarkable. Rwanda is so poor, its per capita income is about 1 percent that of the United States ($370 vs. $39,000).  Its health care sector is an international charity case: “total health expenditures in Rwanda come to about $307 million a year, and about 53 percent of that comes from foreign donors, the largest of which is the United States.”  That’s roughly $32 per person per year, which doesn’t buy much.  Dialysis is “generally unavailable.”  As are many treatments for cancer, strokes, and heart attacks, making those ailments “death sentences” more often than in advanced nations.  Life expectancy at birth is 58 years, compared to 78 years in the United States.  Rwandan children are 15 times more likely to die before their first birthday (7 vs. 107 deaths per 1,000 live births) and 25 times more likely to die before turning five (8 vs. 196 deaths per 1,000 live births) than U.S.-born children.  (If you want to meet some Rwandan kids struggling to make it to age 5, read my friend’s blog, Life of a Thousand Hills.)  And yet, the saddest thing is a healthy-but-uninsured American college student.

What the Times sees as a paradox isn’t really a paradox.  Yes, the poorer nation has a higher levels of health insurance coverage.  But the wealthier nation does a better job of providing medical care to everyone, insured and uninsured alike. The Times reports that Rwanda’s national health insurance system isn’t fancy, “But it covers the basics,” including “the most common causes of death — diarrhea, pneumonia, malaria, malnutrition, infected cuts.”  Surely, the Times must know that anyone walking into any U.S. emergency room with any of those conditions would be treated, regardless of insurance status or ability to pay.  The same is true of other acute conditions, like heart attacks and strokes, for which uninsured Americans receive better treatment than insured Rwandans.  True, some uninsured Americans end up filing for bankruptcy, but let’s be clear: while bankruptcy is no day at the beach, suffering bankruptcy because you got the treatment is better than suffering death because you didn’t.  (As for dialysis, the United States already has universal coverage for end-stage renal disease through the Medicare program.)  The Healthcare Economist puts it this way: “Would you rather be sick in the United States without insurance or sick with insurance in Rwanda?”  You get the point.  If there’s a paradox here, it’s that insurance status does not necessarily correlate with access to medical care: uninsured people in the wealthy nation actually have better access to care than insured people in the poor nation.

An even bigger paradox, though, is Rwandan attitudes toward the United States. The United States generates many of the HIV treatments currently fighting Rwanda’s AIDS epidemic, as well as other medical innovations saving lives there and around the world.  More than any other nation, we create the wealth that purchases those and other treatments for Rwandans and other impoverished peoples.  The United States is probably closer to providing universal access to medical care for its citizens – and, indeed, the whole world – than Rwanda.  Rwanda’s “universal” system leaves 8 percent of its population uninsured. Though official estimates put the U.S. uninsured rate at 15.4 percent, the actual percentage is lower; and again, uninsured Americans typically have better access to care than insured Rwandans.  The real paradox is here that Rwandan elites think the United States is doing something wrong. Why?

Here’s one answer: Rwanda’s government explicitly guarantees health insurance to its citizens, and for some people that guarantee has value apart from any health improvements or financial security that may result.  Dr. Agnes Binagwaho, “permanent secretary of Rwanda’s Ministry of Health,” illustrates:

Still, Dr. Binagwaho said, Rwanda can offer the United States one lesson about health insurance: “Solidarity — you cannot feel happy as a society if you don’t organize yourself so that people won’t die of poverty.”

Set aside that a (permanent) third-world bureaucrat is telling the United States how to keep people from dying of poverty.  Binagwaho cannot feel happy without that government-issued guarantee.

How might such a guarantee increase happiness? It could make people happier by reassuring them that they themselves will be healthier and more financially secure (self-interest), or that others will be (altruism).  Yet altruism and self-interest probably cannot explain the “happiness benefits” that people enjoy when governments guarantee health insurance.  As I have argued elsewhere, the jury is out on whether broad health insurance expansions like ObamaCare result in better overall health; they may, but it is entirely possible that they would not.  The jury is also out on whether ObamaCare will produce a net increase in financial security.  It will subsidize millions of low-income Americans, but it will also saddle them with high implicit taxes that could trap millions of them in poverty.  Meanwhile, ObamaCare’s new taxes will reduce economic growth and destroy jobs.  If such a guarantee doesn’t improve health or financial security, it’s not worth much in terms of altruism or self-interest.

But there’s another potential “happiness benefit” that might accrue to supporters of a government guarantee of health insurance: it could make them happier by allowing them to signal something about themselves – e.g., that they are compassionate.  If people use a government guarantee of health insurance in this way, that could explain why Rwandan elites feel bad for uninsured Americans.  They may feel empathy for uninsured Americans because they perceive the American electorate has not sent uninsured Americans a valuable signal (“We care about you!”).  Meanwhile, the act of expressing pity for uninsured Americans allows Rwandan elites to signal something about themselves (“We are compassionate!”).  Robin Hanson has a lot to say about why people might use health insurance and medical care to signal loyalty and compassion.

My hunch is that this is an under-appreciated reason why some people support universal coverage: a government guarantee of health insurance coverage provides its supporters psychic benefits – even if it does not improve health or financial security, and maybe even if both health and financial security suffer.

If that’s the case, then we’re facing the same problem that Charles Murray identified in Losing Ground, his seminal work on poverty:

Most of us want to help. It makes us feel bad to think of neglected children and rat-infested slums…The tax checks we write buy us, for relatively little money and no effort at all, a quieted conscience. The more we pay, the more certain we can be that we have done our part, and it is essential that we feel that way regardless of what we accomplish…

To this extent, the barrier to radical reform of social policy is not the pain it would cause the intended beneficiaries of the present system, but the pain it would cause the donors. The real contest about the direction of social policy is not between people who want to cut budgets and people who want to help. When reforms finally do occur, they will happen not because stingy people have won, but because generous people have stopped kidding themselves.

One thing is for certain.  When Rwandan elites pity uninsured Americans, there is something very interesting going on.

While I’m at it, the health-policy advice I offered to China and India also applies to Rwanda:

Does not the fact that “these countries lack the fiscal resources required for universal coverage because of their…low average wages” suggest that many residents have more pressing needs than health insurance? For things that might just deliver greater health improvements? In a profession where universal coverage is a religion, such questions are heresy, I know.

China and India are in the process of a slow climb out of poverty. It is entirely possible that the best thing those governments could do to improve [health care] markets and population health would be to enforce contracts, punish torts, contain contagion, and nothing else.

Of course, if Rwandan elites support universal coverage largely because they want to signal something about themselves, this advice may fall on deaf ears.

A Response to Jonathan Gruber on ObamaCare & Health Care Costs

In this week’s New England Journal of Medicine, MIT health economist and Obama administration consultant Jonathan Gruber responds to claims that ObamaCare will increase health care costs.  Gruber acknowledges the Obama administration’s estimates that ObamaCare will increase health care spending, but compares that to the administration’s estimate that 34 million otherwise uninsured U.S. residents will obtain coverage under the law:

[B]y 2019, the United States will be spending $46 billion more on medical care than we do today. In 2010 dollars, this amounts to only $800 per newly insured person — quite a low cost as compared (for example) with the $5,000 average single premium for employer-sponsored insurance.

What a bargain!  Of course, Gruber is being sneaky.  The cost per newly insured person is not $800.  It will be higher than $5,000.  But only $800 of that cost will appear as new health care spending.  The rest of that cost will be borne largely by people who already had coverage, but find their access to care reduced.  These include Medicare enrollees who will receive fewer benefits through (or who will be ousted from) their private Medicare plans; Medicare enrollees who will have a harder time accessing care because some hospitals, skilled nursing facilities, home health agencies and other providers “might end their participation in the program,” according to the Obama administration; and maybe even some (currently) privately insured people who find themselves in Medicaid.  (The administration itself says it is “probable” that ObamaCare “could result…in some of this demand being unsatisfied.”)  Other costs include the economic growth and opportunity that is destroyed by ObamaCare’s tax increases, and the costs associated with trapping workers in low-wage jobs.

And that’s if everything goes as planned.  Gruber remains convinced that future Congresses will not undo ObamaCare’s tax increases or downward adjustments to Medicare’s price controls, as Congress has consistently undone scheduled reductions in the prices that Medicare pays physicians.  Gruber’s sometime employer – the Obama administration – itself contradicts his argument when it writes that the bulk of those reductions in Medicare spending are “doubtful” and “unrealistic.”  Gruber inadvertently shows why critics are right to be skeptical about the tax increases and spending reductions when he writes:

The cuts in spending and increases in taxes are actually “back-loaded,” with the revenue increases rising faster over time than the spending increases, so that this legislation improves our nation’s fiscal health more and more over time.

The fact that the austerity measures had to be backloaded is a sign of their implausibility.  If they were popular, they could take full effect tomorrow.  But their implementation had to be delayed to head off significant political resistance – resistance that will express itself between now and when those austerity measures take effect.

On the broader issue of reducing the growth of health care spending, Gruber claims that ObamaCare “cautiously pursue[s] many different approaches toward cost control and stud[ies] them to see which ones work best.” Yet each approach is all but guaranteed to fail. The tax on high-cost health plans? Unlikely to survive. (But at least Gruber now admits it is a tax.)  The rationing board designed to curtail each congresscritter’s ability to keep the money flowing to health care providers in their districts? Also unlikely to survive, for obvious reasons.  Pilot programs experimenting with different government price and exchange controls? Even successful pilot programs get nixed.  Comparative-effectiveness research?  A pipe dream that fails every time the government tries it.

To the extent that these spending cuts fail to materialize, health care spending will rise, and deficits will deepen. Congress will need to impose additional tax increases, and/or find sneakier ways to ration medical care curb health care spending.  Gruber’s Massachusetts enacted ObamaCare four years ago, and that’s exactly what state officials are doing.

Since President Obama signed this law, the Congressional Budget Office has announced that its cost, including the so-called “doc fix” and spending subject to appropriations, is already about $200 billion higher than previously believed.  As I’ve written elsewhere:

ObamaCare would create new constituencies for government spending, hook existing constituencies on even more government spending, and promise implausible cuts in existing subsidies to constituencies that are highly organized and vocal.

Gruber gets chutzpah points for arguing that the same law would actually contain health care costs.

David Goldhill: “A Democrat’s Case For ‘No’ ”

David Goldhill has done it again.

You may recall his article, “How American Health Care Killed My Father,” from the September 2009 issue of The Atlantic.

Now, at HuffingtonPost, he comments on the health care legislation that may soon face a final vote (of some sort) in the House:

[C]ontinuing our Party’s almost unquestioned conflation of health insurance with health care, the central feature of the proposed “reform” is further extension of our flawed insurance-based system…[D]espite the Administration’s recent heated rhetoric, most of the entrenched health industry interests are quietly or openly in favor of this bill. Should the bill become law, I suspect we will look back at it as an industry bailout…

How…can Democrats in the depths of a recession support a massive tax increase on middle-class job creation…? How…could we justify diverting even more of middle class income to support our broken system of care, further starving families of funds for all their other needs? Most uninsured Americans lack insurance only temporarily; how many of them would trade lesser lifetime job prospects and lower disposable income for the short-term retention of health insurance?…

If the legislation had any real prospect of controlling health care spending, would the pharmaceutical industry be funding the “yes” campaign?

As a former Democrat who hung door knockers for Michael Dukakis in 1988, I know the heavy heart with which he writes.  Read the whole thing.

Watch the video to hear Goldhill’s story: